Employee Handbook

An employee handbook contains information related to a company’s policies and procedures. The company gives its handbook to its employees, generally requiring them to read it completely, to help ensure employees understand the company’s rules, regulations, and benefits. Just what information is contained in an employee handbook varies by the company’s needs, but it should be a useful source of information for both new employees, and those who have worked for the company for a while. To explore this concept, consider the following employee handbook definition.

Definition of Employee Handbook


  1. A handbook or manual provided to employees by their employers, which outlines important company information, policies, procedures, and job descriptions.

What is an Employee Handbook

An employee handbook is a vital communication tool between a company and its employees. Sometimes referred to as an “employee manual,” or a “policies and procedures manual,” an employee handbook is most commonly given to each new employee at the beginning of employment. When well written, an employee handbook clearly explains the company’s workplace policies and procedures, as well as answer basic questions employees may have about their job positions.

By using employee handbooks, the company ensures each employee receives the same information, and that supervisors have uniform guidelines for instructing and dealing with employees. Employee manuals may also protect employers from certain legal issues, should they arise, by specifically outlining how the company deals with such issues as promotions, raises, benefits, discrimination, and sexual harassment.

Content Included in an Employee Handbook

Content included in an employee handbook varies according to the specific needs of the company creating it. Generally speaking, employee manuals provide basic information about the company, such as its history, its mission statement, and the goals and objectives of the business. A well-organized, detailed handbook then provides additional information which, when used, helps ensure every employee knows what is expected of him, and what he can expect from the company. Such information may include everything from the orientation process, to termination of employment, and retirement from the company.

Historically, employee handbooks have been seen to be in the prevue of large corporations in need of a way to ensure each employee is advised of the rules and regulations. The truth is content included in an employee handbook can be of great value to every employer, from the largest international corporation, to the sole proprietorship employing only a couple of people. While the exact information in these manuals will likely vary widely, there is some common information that should be included in every manual, including:

General Company and Employment Information

This section introduces new employees to the company itself, and provides the company’s basic policies on employment eligibility, job postings, job classifications, employment recommendations by employees, procedures for termination and resignation, and transfer and relocation procedures.

At-Will Employment

Most companies hire employees on an “at-will” basis. This means that any at-will employee may be laid off or fired for a valid reason, or for no reason at all. Every company’s employee handbook should state the terms of employment, whether at-will or contract, conspicuously at the front of the manual. It is a good idea to include a specific statement that the employee handbook is not to be considered an employment contract.

For example:

William was hired by ABC Corporation’s research department. While William seemed to learn his job duties quickly, he had trouble getting along with his co-workers and his supervisor. Nine months after William started work at the company, he is fired. William is angry and claims ABC Corp had no reason to fire him, and so he is being discriminated against.

ABC Corp is protected, however, as the law allows them to employ people on an at-will basis, which legally allows them to fire anyone without cause. The company further protected its rights by clearly stating in its employee handbook that all employees are at-will.

Orientation Procedures

The orientation procedure of the handbook may include details about the human resources department and how to get into touch with them should the need arise, as well as the chain of command, making it clear who each employee reports to. This section may also be used to provide new employees with the necessary tax forms, proof of identity forms, and proof of completed testing or certificates, if appropriate.

Non-Disclosure Agreement

Some employee handbooks will contain specific information about the company’s non-disclosure policy, as well as any forms that need to be signed. While not all companies have the need of a non-disclosure agreement (“NDA”), it is a vital component of employment for others which need to protect their corporate and product secrets from being disclosed to third parties. The NDA section of the employee handbook should detail the information the employee is required to keep secret, as well as the consequences for anyone breaching the NDA.

Compensation, Taxes, and Benefits

Many employers do not outline specific compensation rates, raises, and such in their employee handbook. This is because doing so would seem like a contract of sorts, binding the employer to paying certain employees certain rates, even if the employee’s performance is sub-standard. Even in the absence of specific salary information, every employee handbook should specify how the company makes required tax deductions from each employee’s paycheck, as well as any other deductions that will be made.

The compensation, taxes, and benefits section of the manual should also discuss how promotions and raises are determined, as well as timekeeping records, pay periods, and overtime. Benefits include such things as bonuses, paid time off, sick leave, paid vacations, paid insurance, and other perks of the job, if applicable. Information on eligibility for employee benefits, including any optional benefits, such as employer-matching retirement account deposits (401(k)), and wellness programs.

Anti-Discrimination Policies

It is important for every employer to comply with all anti-discrimination and anti-harassment laws in order to avoid serious legal consequences. It is illegal for employers to discriminate against anyone on the basis of age, gender, race, religion, or disability. The laws regarding discrimination in the workplace are provided by the U.S. Equal Employment Opportunity Commission (the “EEOC”), which also provides help for employers and employees alike in matters of discrimination, harassment, or unfair employment practices.

In addition to the EEOC, information regarding disabled employees, and discrimination against such employees, is provided by the Civil Rights Division of the U.S. Department of Justice. This website, located at ADA.gov, makes available the laws regarding discrimination against disabled individuals is contained in the Americans with Disabilities Act (the “ADA”). An effective employee handbook should describe the steps an employee can take should he feel he is being discriminated against or harassed in the course of his employment.

Standards of Conduct

The standards of conduct portion of an employee manual should outline the employer’s expectations of how its employees conduct themselves, as well as their appearance while at work. This section may include a dress code, ethics, and legal obligations, as well as other policies, such as no smoking on the premises, no firearms, or anything specifically forbidden or required by the company. Additionally, many employers include issues such as personal phone and computer use, and protection of company information.

Drug and Alcohol Abuse

Some employee handbooks include a section that specifically covers the company’s policies on alcohol and drug abuse. Most employers prohibit drugs and alcohol in the workplace, and the number of employers requiring random drug testing is increasing. The manual should be specific about what constitutions a violation of this policy, and the consequences that might apply, as well as the steps the company is willing to take, if any, to help an addicted employee.

Disciplinary Action

Including a section of the handbook covering disciplinary action that may be taken for violations of company policy helps eliminate confusion, and possibly legal challenges, in the event it becomes necessary to discipline or fire an employee. If the company has a policy of warning employees for certain minor violations of policy, it should be clearly stated. The manual should also clearly list actions for which an employee may be immediately suspended or terminated from employment.

Employee Complaints

Every employee handbook should provide instruction to employees on the process for making and filing complaints. It should be clear about to which supervisor the employee should file any complaint, as well as to whom the employee should turn if the first supervisor fails to act on the complaint. The manual should also make it clear that neither employee nor employer may retaliate when a complaint is made.

Safety and Security

A good employee handbook has information pertaining to safety and security, in order to create a peaceful and safe work environment. The safety and security section should cover workplace violence, harassment, and physical, verbal, and sexual abuse. It should also discuss workplace compliance in regard to accidents and injuries. If required by law, the handbook should also include information about safety regulations issued by the Occupation Safety and Health Information Administration (“OSHA”).

Electronic Communications Policy

Any employee handbook should include company policies that relate to use of the phone, text messages, email, Internet, or social networking sites. Employers who wish to maintain control over such communications may specify that any electronic communications made while at work are not subject to privacy, and may be read by the employer at any time. For example, if one employee accuses another of sending harassing emails, the employer has the right to read these emails to assess the situation.

Agreement Form

At the end of the employee handbook, a form for the employee’s signature should be included. On this agreement form, the employee’s signature signifies his or her understanding of the information provided in the employee handbook, as well as his or her agreement to its terms and conditions of employment.

What Should Not be Included in any Employee Handbook

While an employee handbook should include specific items, there are certain things that should not be included in any employee handbook. For instance, no employer should place any unconditional promises in the manual, as these may lead to civil lawsuits in the future, should a disgruntled employee attempt to enforce one of those promises. Another concern is any promise of continued employment, or indefinite employment, even in the face of future change.

Other terms that should not be included in an employee handbook include:

  • Permanent position – no “regular” employment positions should be referred to as “permanent” positions. This may create a legal expectation that employment to the position is guaranteed, or that it is not “at-will.”
  • Probationary period – this term tends to lead the employee to believe his status will change at the end of his “probationary period” to a permanent employee who is not subject to termination at will. If the employer intends the employee to remain at an at-will status, it should use such terms as “introductory period,” or “orientation period.”
  • Just Cause – in most states an employer may terminate an at-will employee for no reason at all. What employers cannot do is terminate an employee for the wrong reason, which might include issues of discrimination. Including the term just cause in the employee handbook may create confusion and some legal liability.
  • Due Process – an employer should protect itself by not promising any employee “due process” in grievances, disciplinary actions, or termination of employment. This may create civil liability, as an employee challenges the employer’s idea of due process.

Why Every Employer Needs an Employee Handbook

Employee handbooks serve the purpose of organizing the company’s expectations, rules, and regulations in one place for both employer and employee to access easily. Every employer needs an employee handbook because it also protects the employer in the event of litigation, as it can prove it provided the employee with the relevant information, and that the employer strictly follows its policies.

Multi-State Employers

Companies that employee workers in more than one state should customize their employee handbooks for each state, as workplace laws vary by jurisdiction. In addition, as laws and company policies change, the handbooks should be immediately updated to reflect the changes. These updates should be sent as amendments to each current employee, in addition to including the update information in new handbooks.

When it comes to creating an employee handbook, the size of the business should not matter. An employee handbook saves training time when new employees are hired, and serves to create a paper trail in the event of litigation.

Creating a Handbook

The first step in creating an effective employee handbook is to learn the laws of the state in which the company operates. Some policies are required to be included handbooks by law, so it is a good idea to consult an experienced employment attorney when drafting the manual. Employers can find important labor and employment laws by visiting the U.S. Department of Labor‘s website, as well as the state’s labor department website. If the business operates in more than one state, a different handbook may be required for each location in order to comply with local, federal, and state laws.

Certain provisions are generally required to be included in an employee handbook, regardless of the jurisdiction. These include:

  • Family Medical Leave Policies – The Family Medical Leave Act (the “FMLA”) is a federal law that requires employers with a certain number of employees to provide those workers with unpaid medical leave for the birth or care of their child. The FMLA also covers employees with serious medical conditions.
  • Equal Employment and Non-Discrimination Policies – The U.S. Department of Labor requires companies to post information regarding equal opportunity employment laws, and how they apply to hiring and promotion. This information is required to be posted in view of employees, and should be clearly stated in the company’s employee handbook.
  • Worker’s Compensation Insurance – The majority of states require employers to maintain workers’ compensation insurance covering each employee. This policy should be provided in the employee manual, and may be posted in a conspicuous space for the employees.

Related Legal Terms and Issues

  • Civil Lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
  • Discrimination – The practice of unfairly treating different categories of people, especially on the grounds of ethnicity, national origin, gender, race, religion, and sexual orientation.
  • Harassment – The act of harassing, disturbing, or persecuting someone.
  • Litigation – The process of taking legal action; the process of suing someone, or trying them for a criminal act.

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